Prominent Chartered Accountant, Christopher Ram has crunched the numbers of Guyana’s earnings from oil production and concluded that the idea of paying each household US$5, 000 annually is unrealistic.
Prof. Clive Thomas has floated the idea of the US$5, 000 payment from oil and his colleagues within the Working People’s Alliance (WPA) has publicly pressed forward with the idea of direct cash transfers.
“The saying that if something is too good to be true, it probably is not true applies with great force to Thomas’ bold call,” Ram wrote in his column, ‘Road to First Oil’.
Ram shared that taking the range of variables and using two percent to five percent of Government’s gross revenue as suggested by WPA officials, the amount available per household can be as low as US$23.78 per year where the oil price is US$40 per barrel and cost of production is US$30 per barrel at production of 120,000 barrels per day.
When that figure goes up to 750,000 barrels as is likely in the latter part of the next decade, Ram explained that two percent of gross revenue will go up to US$148.61 per household per year.
According to Ram, at the upper end of the scale of assumptions, five percent of the Government’s take from the production of 750,000 barrels per day with the price at US$80 and cost at US$30 will give each household US$1,701 per year.
“I say with much hesitation that Dr. Thomas suggestion of US$5,000 per household as a direct cash benefit to each household was a good idea ruined by the usual failure of Dr. Thomas to test his numbers which left him woefully exposed. On the other hand, I have heard the criticism that Dr. Thomas’ call was really to divert attention from the very bad Petroleum Agreement signed by the Government of which his party is a member. Whichever is the case, Dr. Thomas has uncharacteristically taken a good idea and then discredited it himself,” Ram stated.
President David Granger has previously stated that he had not seen any formal proposal for direct cash transfer. Ram stated that conditional direct cash transfers are necessary in the face of harsh poverty faced by so many of Guyanese. He stated that while it ought to be one element of the proposed Sovereign Wealth Fund (SWF), advancing it and convincing President Granger requires intellectual leadership.
Ram pointed out that the Government’s green paper on establishing a SWF is not only silent on anything like cash transfers – conditional or unconditional – but it seems to have been written entirely by the multilateral financial institutions with no direct Guyanese input.
“If the WPA and Thomas should now abandon its responsibility to advance cash transfer at whatever level and with whatever condition – then it will find it difficult to rebut any accusations that it is neither responsible nor serious,” Ram noted.
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